- The Washington Times - Friday, December 3, 2004

Job growth fell to 112,000 while wage gains stalled last month, dashing hopes on Wall Street for a robust Christmas shopping season.

The slowdown in job growth reported by the Labor Department yesterday, coming after October’s hefty 307,000-job gain, caused stocks to stumble and the dollar to tumble to new lows against the euro, yen, pound and other currencies. The unemployment rate slipped 0.1 percentage point to 5.4 percent.

Oil prices continued to collapse yesterday, in what economists say is the best hope for reviving healthier growth. But the 24 percent drop in premium crude prices in New York markets in the past month to $42.54 has not filtered down to consumers and workers.

“Jobs offering good pay and benefits will remain scarce,” said Peter Morici, business professor at the University of Maryland, because the economy is barely creating the 150,000 jobs needed each month to keep up with the growth in workers, much less put to work more than 2 million long-term unemployed.

The economy has generated an average of 153,000 jobs a month, or 2.3 million jobs, since August 2003.

Treasury Secretary John W. Snow, who appears to be under pressure from the White House to join an exodus of top Cabinet officials, pointed out that the pace of job growth has picked up this year to about 200,000 a month — more than enough to accommodate new workers.

“I wouldn’t put too much weight on one month,” he said in a Bloomberg News interview. The averages are “pretty good.” He appeared to contradict rumors of his departure, noting that he had “played a part … in seeing the American economy turn around and get on a good path.”

Rep. Pete Stark, California Democrat, took the opportunity to poke fun at the Republican administration. “Unless you’re qualified to be a Cabinet secretary, you’ll probably find that job openings are still scarce,” he said.

Many of the new jobs reported by the Labor Department last month were in high-paying fields such as health care, finance and business. But manufacturing jobs, which also are usually well-paying with benefits, declined by 5,000 in a third straight month of losses.

Retailers signaled they anticipate poor Christmas sales by laying off 16,000 workers on the eve of their biggest season of the year, during which consumers make about one-quarter of their purchases — not a good sign, analysts said.

Mr. Morici noted that many manufacturing jobs were lost because of production cuts in the auto sector, which leads to layoffs not only on auto assembly lines but at steel, aluminum, plastics and other secondary suppliers. Ford and GM have scheduled additional production cuts next year.

“The specter of a winter jobs drought looms large and frightening,” Mr. Morici said. He sees the economy caught in a vicious cycle as it loses manufacturing jobs to companies exploiting cheaper labor in China and other developing countries.

As the American market is bled of jobs, the effect depresses the wages of workers who still hold jobs. The result last month was a meager 1-cent increase in the average wage to $15.83 an hour and a decline in weekly wages as managers cut hours.

For the many Americans who spend nearly everything they earn, the anemic wage gain does not stretch far enough to cover spiraling prices for food, health care and energy.

Also, with shrinking spending power, consumers cannot buy as much they would like for Christmas, with some surveys showing as much as a quarter of consumers expecting to cut back this year.

One bizarre but perhaps inevitable result of the vicious cycle is discount stores like Wal-Mart that cater to low-wage workers must buy many of their goods from China and other low-wage countries to keep prices down. They have been reporting particularly disappointing sales in recent months as wages were squeezed.

Mr. Morici sees no end to the downward spiral unless China and other Asian countries are forced to stop artificially devaluing their currencies to make their exports competitive.

“Wages will continue to only grow modestly, more workers will be compelled to accept positions without health benefits, and benefits packages, generally, will continue to deteriorate,” he said. “Times will remain tough for the employed, first-time jobs seekers and workers looking to improve their circumstances.”

Roger M. Kubarych, economist with HVB Group, called the November job gains “rather disappointing” but “just strong enough” to keep the economy on a respectable growth track.

While hourly workers have been pinched by declining wage growth and rising prices, more well-to-do consumers have been enjoying stronger wage and income gains from the rising value of investments in stocks, bonds, real estate and other areas.

In addition, many consumers appear to be maintaining their spending habits by going heavily into debt. Visa USA reports that credit-card purchases are running 15 percent ahead of last year, despite weak sales overall last month.

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